Plan Your Trip Times Picks

A Struggle for Solvency At Milwaukee Museum

By STEPHANIE STROM

Published: January 29, 2006

The Milwaukee Public Museum, the pride of this fiercely proud city, went bust last summer. Now the question is whether guns, God and a gorilla -- or at least what is left of him -- can restore its fortunes.

The museum, one of the largest natural history museums in the country, is installing an exhibit of Vatican treasures, including a golden cast of Pope John Paul II's hands, that will open next month and is dusting off the 3,000 guns in its collection before members of the National Rifle Association arrive for their annual meeting in May.

It also has plans to showcase the skeleton of a gorilla named Samson, once the star attraction at the local zoo. ''It will be something like Sue,'' said Daniel M. Finley, the museum's new director, referring to the Tyrannosaurus rex skeleton that is the marquee exhibit at the Field Museum in Chicago.

These exhibits, coupled with huge job and other cost cuts, are expected to go a long way toward meeting the museum's $12.7 million budget for this year.

But like many museums in midsize cities around the country, eager to break out of a rut of stagnant attendance and attract tourists to stoke civic pride and the local economy, the Milwaukee Public Museum spent heavily on an aggressive expansion that never paid off. Besides its operating costs, it is saddled with $28 million in debt and other liabilities -- a stark warning to other institutions that build in hopes that ''they will come.''

''The debt is still there,'' said Jerome J. Heer, director of audits for Milwaukee County. ''It looms like a great big dark cloud.'' This year alone, the debt will cost $1.2 million, or almost 10 percent of the museum's budget.

Largely by borrowing in the late 1990's, the museum opened stores across the state, bought half-interests in an Imax theater and a rain forest in Costa Rica, built a butterfly vivarium and began holding major exhibits. It even started selling chocolate made from cacao from its rain forest.

Those programs required big initial expenditures, additional staff members and higher energy bills to maintain the live butterfly exhibit. Steep increases in health care costs and other rising expenses, problems facing many institutions, contributed to the problem.

The expansion produced higher revenues -- just not enough to cover the higher costs. Paid attendance, which averaged 364,395 in the past five years, remained relatively flat, and losses from the foray into retail and Imax totaled $1.5 million. Concessions earned just $43,219 in that time, according to an audit by Milwaukee County.

''We thought we could make money selling candy bars,'' Mr. Finley said with a derisive snort.

The museum ended its fiscal year in August with a deficit of more than $10 million and just $387,000 in its endowment -- effectively bankrupt. ''I think its aspirations generally exceeded its resources,'' said Roger W. Bowen, general secretary of the American Association of University Professors.

Mr. Bowen was hired in 2001 to replace William Moynihan as the museum's director but left after a year. Mr. Moynihan, a former vice president of the American Museum of Natural History in New York, was beloved in the community, and filling his shoes added another big expense.

Terry A. Gaouette, the museum's former chief financial officer, estimated that replacing Mr. Moynihan, first with Mr. Bowen and then two others, one of whom backed out at the last minute, cost the museum roughly $1 million.

While the door revolved above him, Mr. Gaouette juggled the museum's finances, drawing on the endowment and grants to avoid default and pay creditors, and negotiating with banks to postpone deadlines and obtain additional credit.

''We had commitments we had to fulfill,'' he said. ''People kept telling me things are going to get better, I'm going to bring in more money, just wait -- and then at the last minute, they'd come up short.''

The county audit questions some of Mr. Gaouette's decisions, saying that he violated limits on the use of the endowment for operating purposes, presented financial reports that were ''misleading and inaccurate'' and violated agreements struck with private and public donors, including the National Science Foundation.

The museum's 27 board members, who were criticized in the audit as being disengaged, also point a finger at Mr. Gaouette -- although not directly, because the museum signed an agreement when he resigned that bars it from disparaging him.

''We had some management people who were not disclosing the true condition of the museum's finances,'' said John E. Schlifske, the new chairman of the board. ''It was a matter of misplaced trust by the board.''

Not at all, Mr. Gaouette said. ''To say they didn't know, to say they didn't understand, it just defies credulity,'' he said.

He denied any wrongdoing and provided e-mail messages and memorandums sent in the past few years to Michael D. Stafford, the former chief executive, and the board that clearly noted the financial problems.

Three years ago, Mr. Gaouette warned the audit and finance committee that the museum had ''experienced several factors which contributed to its worst financial performance in eight years.''

On Aug. 8, 2004, he wrote to Mr. Stafford, ''We are in serious trouble.''

Mr. Gaouette said his reports to the board contained all the information needed to see the museum's problems.

Mr. Heer and Mr. Schlifske agreed that the board's attentiveness to the museum's finances was ripe for criticism. But Mr. Heer said that although Mr. Gaouette was issuing warnings, he also put a rosy spin on financial affairs.

For instance, he told the committee that grants to the museum had fallen in 2002 to $212,000, nearly an 80 percent decline in one year -- and then offered additional information suggesting the decline was really only about 35 percent.

''A lot of information they were getting was modified, adjusted, confusing,'' Mr. Heer said. ''The weekly financial reports he was giving them were 80 columns wide -- but the three numbers you'd need to really get the picture weren't there.''

While there is little agreement over where the blame lies, there is a consensus that the museum's biggest challenge is finding money to retire debt.

Some say that Milwaukee County, which ran the museum until 1992, and still appoints nine board members and supplies roughly a quarter of its budget, will have to come to the rescue. But Mr. Finley, who left his post as the executive of neighboring Waukesha County to take the museum helm, dismissed that idea.

He responded positively when asked whether the banks holding the debt might forgive some of it. But Mr. Schlifske, a senior executive at Northwest Mutual Life, one of Milwaukee's leading financial institutions, shook his head firmly. ''There are no plans to ask our creditors to help us out,'' Mr. Schlifske said.

He expects local donors to come to the museum's rescue, gesturing toward Lake Michigan and the gleaming new wing on the Milwaukee Art Museum. Construction of the wing cost more than three times the original projection, and raising the final $30 million proved difficult. The art museum coaxed Sheldon B. Lubar, one of Milwaukee's biggest philanthropists, to take up the task.

Mr. Lubar did it by going back to the museum's directors, who provided much of the initial money, and twisting their arms for two years. ''I told them you've got to protect your investment, and the only way to do that is by putting up more,'' he said.

The public museum cannot make that argument, and Mr. Lubar said he doubted it could raise money toget out from under its debts. ''People don't want to give money to correct someone else's mistakes,'' he said.

Mr. Schlifske is undaunted. The museum has a place in the heart of Milwaukee's 600,000 residents and already has secured $1.2 million in pledges, roughly half of which will be used to pay back a $6 million line of credit needed to weather the crisis.

''This is a beloved institution,'' he said. ''Milwaukee will stand behind it.''

Photos: Daniel M. Finley, above, left his job as the Waukesha County executive to become the museum's director. Below, the skeleton of a humpback whale hangs above the museum's stairway entrance.; The Milwaukee Public Museum, above, embarked on a major expansion that never paid off. Below, Gianna Bombicino, 8, of Lindenhurst, Ill., in the museum's costly live butterfly exhibit. (Photographs by Kevin J. Miyazaki for The New York Times)

Book FlightsBook A HotelRent A CarBook A CruiseBook A PackageBook An Activity